The UK is on track to exit recession as the country’s economy returned to growth at the start of the year, according to official figures.
Figures from the Office for National Statistics (ONS) revealed that gross domestic product (GDP) is estimated to have risen by 0.2 per cent.
This follows a reported decline of 0.1 per cent in GDP for December 2023 which pulled Britain into a technical recession.
A recession is is defined as happening when a country experiences two consecutive quarters of negative economic growth.
The latest figures from the ONS suggest that the UK is in line to experience a shallower recession after GDP plummeted by 0.3 per cent over the last quarter.
This rebound in the economy has been supported by an expansion in the service and construction sectors.
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The UK's GDP for January 2024 rose which signals a shallower recession for the economy
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In January, a 3.4 per cent rise in public spending in shops and online was the main contributing factor behind the ONS’s estimate of 0.2 per cent growth in services.
Construction jumped by 1.1 per cent, while production – which includes manufacturing – contracted by 0.2 per cent.
In the three months to January, GDP was 0.1 per cent lower than in the previous quarter and was 0.2 per cent smaller than in the three months ending in January 2023.
However, the country continues to be in a shallow recession after output dropped in the third and fourth quarters of last year.
Yael Selfin, a chief economist at KPMG UK, warned that the UK’s economic outlook “remains relatively gloomy”.
He shared: “Economic growth is not expected to materially pick up this year with demand impaired by the lingering impact of high interest rates.
“Meanwhile on the supply side, the sluggish outlook for business investment and weaker public sector investment will compound weakness in productivity and constrain long-term growth.”
Despite this, the Government shared its relief at the news that GDP is now in an upward trajectory.
Chancellor Jeremy Hunt praised today’s GDP figures and said the Government is “making progress in growing the economy”.
Last week, Mr Hunt outlined his vision for the economy as part of the Government’s Spring Budget, which is expected to be the last one before the next General Election.
Among the announcements included another cut to National Insurance and an overhaul of non-dom tax status.
He explained: “While the last few years have been tough, today’s numbers show we are making progress in growing the economy – part of which makes it possible to bring down national insurance contributions by £900 this coming year.”
“But if we want the rate of growth to pick up more we need to make work pay which means ending the unfairness of taxing work twice.”
Liz McKeown, the director of economics statistics at the ONS, signalled that today’s figures are a good sign for the UK economy going into 2024.
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Jeremy Hunt outlined his plans for the economy in his Spring BudgetPAThe ONS statistician said: “The economy picked up in January with strong growth in retail and wholesaling.
“Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.
“These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry. Over the last three months as a whole, the economy contracted slightly.”
Reacting to the news, Shadow Chancellor Rachel Reeves said: ““After 14 years of economic decline under the Conservatives, Britain is worse off.
“Rishi Sunak’s claims that his plan is working are already in tatters after Britain was hit by recession last year.”
